Sexy!

11.13.12

How “.XXX,” Porn’s Domain Name, Made Hundreds of Millions

The company that pioneered the porn-centric “.xxx” domain name is making millions. Alex Klein reports.

One of the early American republic’s hottest trades was land speculation. A square acre in swampy Virginia could be a future empire’s swanky capital suburb. And so, many of America’s richest men—and most of its framers—took some part in the feverish prospecting game, carving out tracts that still bear their names.

But in 2000, when the affable British net tycoon Stuart Lawley first proposed a similar plan, he didn’t make many friends. Lawley dreamed of a “.xxx” domain name: fresh land for all the porn the Internet could hold. But the adult film industry balked, fearful that the “.xxx” option would become law and turn the Web’s red-light district into a walled-off ghetto. Senators Max Baucus and Eric Pryor tried to do just that. And the Bush-era Christian conservative coalition objected for all the reasons you might expect. Amid the backlash, the Internet Corporation for Assigned Names and Numbers (ICANN) turned his application down three times in a row.

But last March, with thousands of “.xxx” preorders already in Lawley’s pocket, ICANN buckled, and gave his company, ICM Registry, exclusive dominion over “.xxx”—akin to VeriSign’s lucrative hold on “.com.”

Today, the reason for his persistence is clear. Lawley has sparked a landrush: “.xxx” is a license to print money—the most financially successful new domain name in decades.

ICM has sold just short of 230,000 “.xxx” URLs, according to official data from ICANN. That’s five times more than the company expected when it first filed with ICANN. Indeed, in his original business plan, Lawley’s best case scenario was reaching 250,000 names after five years. The company has amassed more than 70 worldwide resellers, middlemen like GoDaddy, who have pumped up sales volume.

At minimum, each of those 230,000 “.xxx” domains bring in $62 a year at the wholesale rate—about 10 times the average fee for a “.com.” But ICM also sells “premium” names for huge pricetags. Gay.xxx? Sold for half a million dollars. Fetish.xxx and Shemales.xxx went for $300,000 and $200,000 apiece. The lion’s share of the rest go for above $50,000. The company has sold more than 200 premium names so far, and just listed another 1,000. If you’re interested, you can be the proud owner of www.girls.xxx for $222,000.

For Lawley, the speculation will pay off. Do the math, and the company is on track to pull in almost $200 million this year.

The historic success of the “.xxx” name dwarfs almost all other “top-level domains,” as they’re called. The classic “.com,” “.net,” and “.org”—long the only games in town—were supplemented by “.biz,” “.info,” .museum,” “.coop,” and a handful of others in 2000. Few took off. In 2004, the same year ICM applied for “.xxx,” ICANN added “.mobi,” “.tel,” “.travel,” “.jobs,” and “.post”. A bunch more duds. The explosive registration of the “.xxx,” over scores of objections, took pretty much everyone by surprise. As Lawley puts it, “We’ve been a bit of a pioneer.”

Beyond the impressive bottom line, “.xxx”’s impact on the Web has been huge —and controversial. The name now accounts for more than 20 million pages of porn. ICM’s stated mission, a holdover from its days fighting off the morality police, is to bring a bit of order and common sense to the Web’s backwaters—to clean up the pornosphere’s spam and virus, and “increase your girth”–filled Wild West.

And so, every “.xxx” domain is virus-scanned daily, and ICM performs a background check on all potential registrants to prevent fraud. The company even gives users the ability to screen all “.xxx” content if they wish. Lawley says that “.xxx” is a safer environment—and if it’s one you don’t want to tread in, the domain name designation makes it very easy to avoid.

For those who do want to stumble into “.xxx” every now and again, ICM also operates a search engine, “search.xxx”, which scored 1.43 million visitors in its first week when it launched in October, putting it among the top five thousand websites in the world. (Google started deranking adult content earlier this year; as Lawley put it, “Last year, if you typed in pussy, ‘pussy.com’ would be the No. 1 result; now, with the changing algorithm, ‘pussy.com’ is page seven.”) In short, ICM doesn’t just want to own its raunchy new land-holdings; it wants to keep them clean and well ordered, too.

Gay.xxx? Sold for half a million dollars. Fetish.xxx and Shemales.xxx went for $300,000 and $200,000 apiece.

“If you’re a man of the world,” Lawley told me, “you’ve encountered these disruptive pop-ups and adverts.” The Web speculator had already gotten rich on various nonporn-related ventures before ICM, investing, chairing, and selling a fax-machine company, a Web services firm, and a British Internet service provider. According to the The Sunday Times of London, he’s among Britain’s 1,000 richest people. He resides in Palm Beach Gardens, Fla., where the 12-person ICM is based, and, according to Bloomberg Businessweek, drives a Rolls-Royce Phantom Coupé.

But although Lawley’s making a lot of money from “.xxx,” not all of it is coming from pornographers. Thousands of the domain names have been bought defensively. In April, ICANN reported that more than 82,976 “.xxx” registrations, about a third of the total, were for nonadult purposes. That means that thousands are buying “.xxx” simply out of fear, concerned that some prankster or exploiter might register their brands (or first and last names) in the pornosphere. Many academic institutions have been quick to fork over money to Lawley simply to keep their names unused in the “.xxx” world. The University of Kansas paid $3,000 to buy www.KUgirls.xxxand, www.KUnurses.xxx, and several others. And in presale, Nike.xxx, Pepsi.xxx, and Target.xxx were all quickly snapped up. Even GoDaddy’s own advertisements for the domains begin with the sobering reminder, “Secure your brand. Protect your reputation.” In March, a Turkish cybersquatter reportedly registered scores of Pope Benedict–themed “.xxx” sites and filled them with entreaties to “find Islam” as well as pictures of the Quran.

Lawley estimates that about 10 percent of all Internet porn traffic is going through “.xxx” names. By that metric, Lawley has scored some the Web’s most fruitful real-estate. But with so many defensive registrations, others say he’s running a fear-driven racket. Either way, the site-count is accelerating, and the money is pouring in. It’s not likely to stop soon. ICANN gave ICM a 10-year license over the “.xxx” properties. And in April, Lawley announced that he’ll make a play for even more adult-themed domain names: “.sex,” “.porn,” and “.adult.” ICM plans to launch a micro-payment system in 2013, akin to iTunes, which will streamline the process of paying for porn on any “.xxx” site —something that should cheer the porn industry, which has been as decimated as the rest of us by the rise of free content. From 2007 to 2011, global porn revenue was halved. Whether Lawley’s personal success will help the industry remains to be seen.